Buying a Home With Less Than 20% Down Payment

Saving for a down payment is one of the biggest steps toward homeownership. For many Canadians, especially first-time homebuyers, saving 20% of a property's purchase price can be difficult.

Many people don't know that eligible buyers may be able to purchase a home with a down payment as low as 5%, depending on the purchase price and mortgage qualification requirements.

In Canada, the minimum down payment depends on the purchase price of the property.

The minimum down payment requirements are:

And these are some examples based on different home purchase prices:

Down Payment Calculation for $800,000 Home

If you're purchasing a home for $800,000, your minimum down payment would be calculated as follows:

• 5% of the first $500,000 = $25,000
• 10% of the remaining $300,000 = $30,000

Total minimum down payment: $55,000

You Should Also Know...

When purchasing a home with less than 20% down payment, you will need to pay for mortgage default insurance. This insurance also allows homebuyers to purchase a home with less than 20% down. Mortgage default insurance protects the lender if the borrower is unable to repay the mortgage.

In Canada, mortgage default insurance is available through providers such as:

• Canada Mortgage and Housing Corporation (CMHC)
• Sagen
• Canada Guaranty

The insurance premium depends on several factors, including the size of your down payment and mortgage amount.

In many cases, the premium can be added to your mortgage rather than paid entirely upfront. However, adding the premium increases your mortgage balance and overall borrowing costs.

Having the minimum down payment does not automatically guarantee mortgage approval.

Your income, credit history, existing debts and other financial factors will still be assessed.

Lenders will assess your overall financial situation, including your:

• Employment and income stability
• Credit score and credit history
• Existing monthly debt obligations
• Debt-service ratios
• Source of down payment
• Property details
• Ability to meet mortgage qualification requirements

Some borrowers, including those who are self-employed or have credit challenges, may be required to provide a larger down payment depending on the lender and mortgage product.

This is where working with a mortgage broker can help you better understand which financing options may be available.

Find Out How Much You Qualify For With Brevity Capital

Before starting your home search, it's important to understand how much you may qualify for based on your financial situation.

We can review your income, credit history, existing debts, available down payment and other financial details to help determine your potential borrowing capacity.

Whether you're ready to get pre-approved or simply exploring the possibility of buying a home, we can help you:

• Understand how much mortgage financing you may qualify for.

• Estimate your potential monthly mortgage payments.

• Identify a realistic home purchase price range.

• Explore mortgage options available through our network of lenders.

• Identify any financial areas that may need attention before applying.

Knowing your potential borrowing capacity early can help you search for homes with greater confidence and make informed decisions about your next steps.

Our team can help you understand minimum down payment requirements, mortgage qualification guidelines and the financing options available to you.

Ready to Explore Your Homebuying Options?

Whether you're purchasing your first home, planning to upgrade or exploring your mortgage options, understanding how much you need to save is an important first step.

At Brevity Capital, we work with over 50 lenders, including major banks and alternative lending institutions to help you explore mortgage solutions even if you have a lower income, low down payment, or bad credit. 

Contact Brevity Capital today for a free mortgage consultation.

Call: (905) 814-4455
Email: [email protected]

*O.A.C. Terms & Conditions Apply. All mortgage approvals are subject to lender guidelines, insurer requirements and borrower qualification.